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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15355 / April 29, 1997
SECURITIES AND EXCHANGE COMMISSION v. GENE BLOCK, INDIVIDUALLY
AND D/B/A BLOCK CONSULTING SERVICES, RENATE HAAG, INDIVIDUALLY
AND D/B/A HAAG + PARTNER, AND ROBERT T. RILEY, INDIVIDUALLY AND
D/B/A THE ROBERTS GROUP (United States District Court for the
District of Massachusetts, Civil Action No. 95-11748RCL).
The Securities and Exchange Commission announced that on
April 21, 1997 the Honorable Reginald C. Lindsay of the U.S.
District Court for the District of Massachusetts entered final
judgments against Gene Block ("Block") of Durham, North Carolina,
who was doing business as Block Consulting Group, and Robert T.
Riley ("Riley") of St. Louis, Missouri, who was doing business as
The Roberts Group. The Court permanently enjoined Block and
Riley from violating the antifraud and broker registration
provisions of the federal securities laws. Additionally, the
Court ordered Block to pay disgorgement of $500 plus prejudgment
interest, and a civil penalty of $5,000. The Court ordered Riley
to pay disgorgement of $500 plus prejudgment interest, but no
civil penalty was imposed based upon his financial condition.
Block and Riley consented to the entry of the final judgments
without admitting or denying the allegations in the Commission's
Complaint. Specifically, Block and Riley were enjoined from
violating Section 17(a) of the Securities Act of 1933, Sections
10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule
10b-5 thereunder.
The Complaint, which was filed on August 8, 1995, alleges
that Block and Riley were offering and selling unregistered and
fraudulent investment programs through advertisements on the
Internet by promising, in some cases, returns as high as 200% to
420% annually. Block and Riley falsely represented that
investors' funds would be invested in risk-free, high-yield
programs and that the initial investment was guaranteed against
loss because a "Prime Bank Guarantee" would be used as security
for the transaction. In fact, there are no legitimate financial
instruments known as "Prime Bank Guarantees." Block and Riley
also falsely represented that the investors' funds would be
doubled by buying and selling "Bank Instruments." However, they
failed to disclose the nature of the "Bank Instrument," how the
trading would generate such unrealistic returns or the risk that
the returns would not be achieved.
The action remains pending against defendant Renate Haag.
For further information, see Lit Release Nos. 14598, 14711,
and 14804.